Still the only thing for which entrepreneurs work
Importance of Money
Money forms the capital of the company.
Capital is of two types:
1. Fixed Capital
Capital required for establishing of the organization.
2. Working Capital
Capital required for running the organization.
Importance of Money
Fixed Capital:
1.Land.
2.Investment in factory building, furniture, tools, etc.
3.Investment in Machinery.
Importance of Money
Working Capital:
1.Raw material
2.Electricity and Water Bills
3.Transportation & Communication
4.Wages to employees
5.Rent
6.Interest
Importance of Money
Other Expenses:
1.Advertisement
2.Show rooms
3.Sales Representatives
Tips for New Entrepreneurs
No need of huge initial investments ..
Help provided by government
Savings in investments
wise use of resources
Estimate the capital required
Income statements:
Sets out entrepreneur s projected revenues and expenses to determine a venture s profits per year.
Cash flow:
Difference between money taken in and spent over a
specified period of time.
Sources of Money
Own Source
Self owned asset
Friends and Family
Credit Cards
Banks and financial institutions
Provide money in the form of:
1. Secured Loans.
2. Cash Credit.
3.Overdrafts.
4.Clean Advances.
Sources of Money
Shares and debentures:
Shares:
Part of the company sold in market in order to raise fixed capital.
Debentures:
Bond of indebtedness issued by the company for a specific period.

Sources of Money
Money Market
Provides short term capital
Capital Market
Provides long term capital
Venture Capital
Angel Investors
Money Management
Aim:
In order to be sure that as an entrepreneur, one is not incurring any kind of loss.
Advantages:
1.Efficient use of capital and other resources.
2.Estimating the exact amount of funds required
3.Helps in wealth maximization.
Money Management
Pricing:
Elements of Cost:
1. Material Cost
2. Labour Cost
3. Expenses.
4. Overheads.
Explicit Cost.
Implicit Cost.
Explicit Cost + Implicit Cost+ Normal Profit= Production Cost.
Market Value depends upon the demand and supply.
Money Management
Detail Accounting:
To keep a detailed record of expenditure and income of an organization.
1.Presents a financial picture of the organization before the businessman.
2.Helps in preparing the budget.
3.Helps to fix the selling price of goods.
4.Helps in reducing losses.
5.Helps to explore the possibility of giving sub-contracts.
6.Helps in using resources economically.
Money Management
Book-Keeping:
Deals with recording, classifying and summarizing business transactions in a systematic manner and in terms of money.
1.Helps to find out profits or losses in the business.
2.Gives exact knowledge about the business transactions that have taken place during a given period of time.
3.Shows cash on hand and bank balance at a given point of time.
Money Management
Depreciation:
Forms a part of fixed capital.
But is optional.
Payments and Collections
Accepting Payments:
1. Promissory Notes.
2. Bills of Exchange.
3. Cheques.
4. Drafts.